Good point. Some of this news has already been priced in to some extent.. But there will be short term weakness. If it's not too bad, there may actually be a good buying opportunity, once it's out in the open- what happened and so forth.
I suppose it depends on what "material weakness" they disclose and how it affects their financial statements. At least they wasted no time in giving their CFO the boot. Sounds like he wasn't ready for prime time. Hopefully he didn't mess things up too much in the seven months he was with Iteris.